Victims protest in the streets against lost ‘profits’ from pyramid scheme bust

By Ellen HuberIn a strange display, at least 300 people took to the streets of Heifei to protest police intervention against their own crimes last Thursday, the South China Morning Post reports. Protesters were involved in a pyramid scheme in Anhui province and, enraged by the potential loss of their investments, protested authorities investigation of scheme organisers.The schemers blocked a Heifei road and aggressively insulted local policemen and officials as they attempted to disperse the crowd and reopen the road, according to the Southern Metropolis Daily.After three hours, police were able to convince everyone to leave without major incident.The protest was sparked by the success of a special unit of the Heifei police tasked with dismantling pyramid schemes in the area.

Image credit: Adam Crowe.

In addition to dispatching the unit, in January Heifei started rewarding residents for tips on pyramid schemes. The city also posted notices warning migrant workers, who may not be privy to the dangers of these so-called investments, that they face deportation to their home villages if they are caught in such a scheme.This recent bust of one scheme’s leaders follows a string of other successful police interventions where schemers’ hideouts are infiltrated and their identities found out. In the past ten months, the Heifei Daily has reported busts of 619 hideouts and arrests of almost 2,000 alleged criminals.So why have these schemes seduced so many of Heifei’s 10 million residents? The head schemers promise ridiculous profits for investors who contribute to a centralized fund. Members are encouraged to recruit more people to join the pyramid lower down, with a promise of greater profits for themselves the more people they sign up.This non-sensical business model, like an unstabilized pyramid, collapses under weight of it’s high number of investors, just in time for the people running the show to pull the rug out from everyone else involved.Part of the police’s success in bringing down these schemers is through undercover work. The Xinan Evening News in Heifei hired a journalist to infiltrate a local scheme. The journalist, who had to be invited by a current investor, was promised a two-year 10.4 million yuan return on an initial investment of a mere 69,800 yuan. That’s an unbelievable 149 times the original investment.The protesters anger, although clearly misdirected at police, is almost understandable when you realize that a 69,800 yuan investment is nearly three times the average income for an urban Heifei resident and a staggering seven times the average income for a rural resident.But here’s where things get weirder. Sounding more like a Scientology auditing session than an investment meeting, the new recruits are “initiated” with a free fish dinner, which symbolizes wealth. Once the newbies are feeling like they’re going to hit the jackpot, they are subjected to days on end of “brainwashing.”What’s more, schemers also had to say “good morning” no matter the time of day, they couldn’t wear slippers during “work hours,” and the men were forbidden from the unbuttoning any of their shirt’s buttons besides the top-most one.